Page 19 - DCOM404_CORPORATE_LEGAL_FRAMEWORK

Corporate Legal Framework

Notes Mistake of Law

It may be (i) mistake of law of the land, or (ii) mistake of foreign law. In the first case the rule is

“Ignorantia juris non-excusat”.
Meaning of “ignorantia juris non excusat”: It means ignorance of law is no excuse. A contract is
not voidable because it was caused by a mistake as to any law in force in India. Thus, where A
and B make a contract grounded on the erroneous belief, that a particular debt is barred by the
Limitation Act; the contract is not voidable. (s.21) Further, “a mistake as to a law not in India has
the same effect as a mistake of fact”.
Mistake of Foreign Law: The above maxim – “ignorance of law is no excuse” is inapplicable to
foreign law. The mistake of foreign law is to be treated as a mistake of fact.
Consequences of Mistake on Contracts: Mistake renders the contract void and as such in case of
a contract which is yet to be performed the party complaining the mistake may repudiate it, i.e.,
need not perform it. If the contract is executed the party who received any advantage must return
it or make compensation for it as soon as the contract is discovered to be void.

Task Peter, by way of misrepresentation, leads Deepak erroneously to believe that
100 quintals of indigo are made annually at Peter’s factory, Deepak examines the accounts

of the factory and finds that only 50 quintals of indigo have been made. Afterwards,
Deepak buys the factory. Deepak now wants to avoid the contract on the ground of
misrepresentation. Advise him giving reasons.

Caselet Expedience, Misrepresentation, or Falsifi cation?
r. Leyos is a senior scientist in an internationally respected cancer research
institute. His research group has recently been studying the regulation of a novel
Dgene that may be a primary factor in allowing tumors to metastasize. Three pilot
(preliminary) experiments have shown positive results consistent with the hypothesized
role, but none of these studies is publishable. In the first case, investigators were not blinded

to the origins of the samples for data collection and analyses. In a second case, adequate
controls were not included and in the third case, the freezer thawed resulting in some
sample degradation. However, despite these limitations, all three pilot experiments were

consistent with a clear confirmation of the hypothesis. Based on these results, a defi nitive
experiment was designed and carried out. Because of the long incubation periods and assay
times, the experiment required six months to complete. Because demonstration of the effect
required pooling of 20 mice for each data point, the experiment was extremely costly both
in lives of animals and dollars spent. On completion of the final assays, Dr. Leyos learned

that labels fell off of two samples, one for a control group and the other for an experimental
group. If the two samples are omitted from the analysis, the results just miss reaching the

accepted level of statistical significance (P<0.05). If the samples are assigned to control and

experimental groups one way, the final analysis is also not statistically significant and is
not consistent with the previous three experiments. However, if the unlabeled samples are

applied in the opposite way, the final analysis is statistically significant and consistent with

the pilot studies. Dr. Leyos is trying to decide among the following courses of action.
Contd...

14 LOVELY PROFESSIONAL UNIVERSITY